Following the Federal IT Spending Numbers

By Don E. Sears |
Posted 2010-04-12

Professional services, systems integrators, security
professionals, health IT software companies and large-scale technology service
providers all stand to benefit from information technology spending in fiscal
year 2011 and beyond, according to upcoming annual research on government
spending.

The latest figures on IT budget requests for the federal
government are $79.4 billion for fiscal year 2011, an increase of 7 percent
over 2010 enacted levels, wrote Kevin Plexico, a senior vice president with
Reston, Va.-based Input Research, in a recent analysis-view presentation on the
federal market.

What is driving government
spending on IT?

"Technology has been a way for the government
to fill gaps in capabilities created by a limited work force," said Plexico
in an interview with eWEEK. "Budgets have increased, but the government
does not have the work force to handle the increased workload that those
increases have entailed, so they turn to technology. Technology has become a
critical part of the way government functions, whether it's basic government
operations (e.g., payroll, financial management, etc.) to meeting increasing and
more complex mission goals (e.g., cybersecurity, health care, etc.)"

Hardware, according to Input's research, is the area of IT seeing the least
amount of growth at only 3 percent over five-year compounded rates. Compared with
IT services at 7 percent over five years, the money appears to be headed toward
specialization that takes advantage of reducing long-term costs while
increasing flexibility and usability.

The federal government's short-term goals include data center and hardware
consolidation, increasing the quality of information security, and showing as
much transparency and accountability as possible with the use of social and Web-based
technologies. Longer term, the U.S. government is focusing efforts on adopting
stronger health care technology practices, boosting a green economy in
renewable energy, establishing smart grids and enhancing the manufacturing of
advanced battery technologies, according to Input Research's Plexico.

"IT Services (Prof Services, SI, and Outsourcing) segments continue to be
the strongest market segments, followed by Software," wrote Plexico.
"Drivers for IT services include Data Center consolidation and
optimization, cloud computing, SOA, and healthcare reform, in addition to the
ongoing human capital challenges the fed faces to meet the ever-increasing
scope of government and the redefinition of areas that are considered
'inherently governmental.'"

The budget, however, does not represent increases for every department in
government. Some, like the Department of Homeland Security, the Commerce
Department and NASA, will be experiencing IT budget decreases. NASA is seeing
the "[l]argest decrease from Space Operations
($75M) and $50m decrease in IT development related to Space Station," wrote Plexico. The Commerce Department
will see the largest decline in IT spending, at 63 percent less than fiscal
year 2010. The largest technology spend increases will be in the Department of
Education (33 percent), Housing and Urban Development (25.4 percent) and the
Department of Defense (7 percent).

Job losses at NASA are expected for some 6,000 contractors in the Houston
area after changes to some NASA programs, including the Constellation Program
and the end of the space shuttle program,
according to an article byThe Houston Chronicle.

Earlier this month, an injection of $144 million
went to colleges, universities, medical centers and major research centers for
adopting meaningful use technology practices from the Health and Human
Services, reported eWEEK.